The CFTC’s decision to ask for a fraud complaint against Goldman Sachs (GS), coupled with Wednesday’s conviction of former hedge-fund tycoon and Galleon Group LLC co-founder Raj Rajaratnam on insider trading, prompted this morning outspoken industry analyst Richard Bove at Rochdale Securities to downgrade his rating on the investment firm to “Sell” from “Neutral,” and cut his GS target to $120 from $163, saying that pressure is building for the Justice Department to take action against Wall Street’s most powerful firm.

“It now appears that the pressure on the Justice Department to bring a criminal lawsuit against Goldman is building to a high pitch,” Mr. Bove said in a note to clients.

According to Bove, Goldman has become government’s “foil for the causation of the financial crisis,” and from his prospective Goldman hasn’t done enough to distance itself from this view.

“Until it does so or until the government exacts its penalties, this stock is a bad purchase,” Bove said. “It does not really matter who is right….It is clear to outsiders that there must be a major restructuring of the company at the board and executive suite levels or Congress will not be satisfied. The company continues to fight such a change,” Mr. Bove wrote. “This is not a good investment. The stock should be sold. When the government and the company conflict is resolved, then one can review what the structure of Goldman is and rethink re- instituting positions.”

Mr. Bove also notes in his report that Rajaratnam’s guilty verdict of all 14 counts could “embolden the CFTC to pursue this case more aggressively, and it is possible that a trial will follow.”

In addition to this morning’s downgrade, another damaging Matt Taibbi article in Rolling Stone (Taibbi famously called Goldman a “vampire squid” in a 2009 article on Goldman) is also weighing on Goldman’s shares that continue to sell off, now -4.6% ($141.40 – $6.50) and trading at eight months lows.